Branded luxury properties can provide a certain comfort-level to property investors or second-home buyers when purchasing property in the Caribbean. Historically, branded hotel properties have not been the most profitable resorts (versus independent boutique hotels) in the region with heavy operations costs, however there are many advantages for the owners of these branded properties such as advanced reservation and marketing systems, and potentially superior operational fluidity.
As the number of very rich people and the size of their collective wealth grows, upscale branded hotels are one of several industries at the high end of the market that are doing increasingly well. Hotels’ revenues generally have also been buoyed by the expansion of a global middle class that draws especially from China, India, and Brazil.
Last week, Range Developments announced a new project, the Six Senses “La Sagesse” resort in Grenada. The developer successfully completed the financing of the Park Hyatt St Kitts through its sales of Limited Partnership shares that qualified purchasers to apply for citizenship in St Kitts. A similar structure has been devised for the Grenada property.
Since the Park Hyatt’s completion in 2016, the developer confirmed to Citizens International that shareholders have received an initial dividend of 2% and that some of the earlier purchasers have resold their shares (which they had to own for a min. of five years under the citizenship program rules) successfully to new citizenship applicants. This is good news for branded CIP share offerings.
Another branded hotel project currently under construction in Grenada is Kawana Bay to be operated by U.S.-brand Kimpton Hotels. Sales of the units in the new Grenada hotel are going very well with Phase One completely sold out.
The Marriott Residences in St Kitts sold out quite fast when Citizens International sold them in 2013 and now some of those units are coming up for resale. They are well-managed with an occupancy rate of over 95% to long-term renters giving unit owners a reliable 2-3% return per annum.
Two new Marriott hotels have been announced in Antigua and the growth of brands seems to be accelerating not slowing down as one might have expected. Over the last ten years we have heard a lot about the “anti-brand” movement mostly driven by the millennial generation seeking the unique in everything they engage with. Hence the rise of “soft brands” like Marriott’s Autograph Collection, a group of individually named hotels with big-brand Marriott still providing back-end support.
Now the biggest hotel group in the world (after purchasing Starwood in 2017), Marriott Hotels announced only last week their plans to add 1700 hotel in the next three years alone. Yes you read that correctly. Marriott says you really can have it all when it comes to a hotel company — both scale and quality.
This past year we have seen global brands like the Four Seasons continue their portfolio expansion with openings in new markets and, in the case of Four Seasons, the much-anticipated debut of first-ever standalone Private Residences in London. It seems a brand is nothing but good, when it comes to selling property.
For all the desire we have seen for individuality amongst the fastest growing travel segment of millennials, the desire for the familiar and trusted appears to continue to go from strength to strength in tandem with the demand for the unique.
Hotel revenues globally are underpinned by the growth of wealth and the continuing growth of the travel industry, and the potential value in investing hotel properties when applying for citizenship looks appealing. But each investment deal is individual so it’s important to look at the fine print and understand exactly what the exit route is as an investor. How long does it take branded hotels in the Caribbean to break even, let alone share profits? Are the investment shares worthwhile for a short-term five year investment, or are they a better long-term play i.e. 15-years or more? What are the real benefits of such an investment?
One thing we are sure of is that brands continue to help sell property but as with any property investment the best assessment is not only of the name associated with your bricks and mortar, it’s critical to analyse the location, development team, market, operations model and exit options.
To find out more about branded hotel investments that are approved for citizenship, please contact us.
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